Early Christmas for US shareholders

Fund manager's comment

With US corporate profits at their strongest since the 1960s, representing almost 9% of GDP, the US...

With US corporate profits at their strongest since the 1960s, representing almost 9% of GDP, the US equity market has rallied in recent months and is now back at levels last seen in mid-2001. Christmas has surely come early for many American shareholders. Yet we believe that investors should be cautious about increasing exposure to US equities from here. Higher raw material costs accelerating wage growth and rising interest-rates are the most immediate headwinds. We also expect the rate of expansion to slow because of below-average levels of capacity utilisation, even though profits margi...